Economy of Cambodia
Encyclopedia
The Economy of Cambodia has seen rapid economic progress in the last decade. Per capita income
, although rapidly increasing, is low compared with most neighbouring countries. The main domestic activity on which most rural households depend is agriculture
and its related sub-sectors. Manufacturing
output is varied but is not very extensive and is mostly conducted on a small-scale and informal basis. The service sector is heavily concentrated in trading activities and catering-related services. Cambodia has reported that oil and natural gas reserves have been found off-shore.
During 1995, the government implemented firm stabilization policies under difficult circumstances. Overall, macroeconomic performance was good. Growth in 1995 was estimated at 7% because of improved agricultural production (rice
in particular). Strong growth in construction
and services continued. Inflation dropped from 26% in 1994 to only 6% in 1995. Imports increased as a result of the availability of external financing. Exports also increased, due to an increase in log exports. With regard to the budget, both the current and overall deficits were lower than originally targeted.
After four years of solid macroeconomic performance, Cambodia's economy slowed dramatically in 1997-98 due to the regional economic crisis, civil violence, and political infighting. Foreign investment
and tourism
fell off. Also, in 1998 the main harvest was hit by drought. But in 1999, the first full year of peace in 30 years, progress was made on economic reforms and growth resumed at 4%. The long-term development of the economy after decades of war remains a daunting challenge. The population lacks education and productive skills, particularly in the poverty
-ridden countryside, which suffers from an almost total lack of basic infrastructure
. Recurring political instability and corruption within government discourage foreign investment and delay foreign aid. On the brighter side, the government is addressing these issues with assistance from bilateral and multilateral donors.
Cambodia's emerging democracy
has received strong international support. Under the mandate carried out by the United Nations Transitional Authority in Cambodia
(UNTAC), $1.72 billion
(1.72 G$) was spent in an effort to bring basic security, stability and democratic rule to the country. Regarding economic assistance, official donors had pledged $880 million at the Ministerial Conference on the Rehabilitation of Cambodia (MCRRC) in Tokyo
in June 1992, to which pledges of $119 million were added in September 1993 at the meeting of the International Committee on the Reconstruction of Cambodia (ICORC) in Paris
, and $643 million at the March 1994 ICORC meeting in Tokyo. To date, therefore, the total amount pledged for Cambodia's rehabilitation is approximately 12.3 G$.
the 2007 GDP growth was driven by consumption and investment. Foreign direct investment
(FDI) inflows reached US$600 million (7 percent of GDP), slightly more than the country
received in official aid. Domestic investment, driven largely by the private sector, accounted
for 23.4 percent of GDP. Approximately 2,860 new businesses registered for operation in
2007, a 71 percent increase over 2006.
Although risks have increased, economic prospects for 2008 remain strong. The projected 7.5
percent growth rate for 2008 reflects a mix of growth in services (mainly tourism) and
construction combined with a slowdown in garment exports. Export growth, especially to the
US, began to slow in late 2007 accompanied by stiffer competition from Vietnam and
emerging risks (slowdown in the US economy and lifting of safeguards on China’s exports).
Although exports of cash crops have grown fast in recent years, developments in the garment
industry have a major impact on Cambodia’s export performance. On the other hand,
Cambodia’s exporters might benefit from the depreciation of the dollar. Another risk is
uncertainties in the construction sector.
Household income or consumption by percentage share:
lowest 10%: 2.6%
highest 10%: 23.7% (2011)
Agriculture - products:
rice, rubber, corn, vegetables, cashews, tapioca, silk
Industries:
tourism, garments, construction, rice milling, fishing, wood and wood products, rubber, cement, gem mining, textiles
Industrial production growth rate: 5.7% (2011 est.)
Electricity:
Exchange rates:
riels (KHR) per US dollar - 4,395.62 (2011), 4,145 (2010), 4,139.33 (2009), 4,070.94 (2008), 4,006 (2007), 4,103 (2006)
Per capita income
Per capita income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate and dividing it by the total population...
, although rapidly increasing, is low compared with most neighbouring countries. The main domestic activity on which most rural households depend is agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
and its related sub-sectors. Manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
output is varied but is not very extensive and is mostly conducted on a small-scale and informal basis. The service sector is heavily concentrated in trading activities and catering-related services. Cambodia has reported that oil and natural gas reserves have been found off-shore.
During 1995, the government implemented firm stabilization policies under difficult circumstances. Overall, macroeconomic performance was good. Growth in 1995 was estimated at 7% because of improved agricultural production (rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
in particular). Strong growth in construction
Construction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...
and services continued. Inflation dropped from 26% in 1994 to only 6% in 1995. Imports increased as a result of the availability of external financing. Exports also increased, due to an increase in log exports. With regard to the budget, both the current and overall deficits were lower than originally targeted.
After four years of solid macroeconomic performance, Cambodia's economy slowed dramatically in 1997-98 due to the regional economic crisis, civil violence, and political infighting. Foreign investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
and tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
fell off. Also, in 1998 the main harvest was hit by drought. But in 1999, the first full year of peace in 30 years, progress was made on economic reforms and growth resumed at 4%. The long-term development of the economy after decades of war remains a daunting challenge. The population lacks education and productive skills, particularly in the poverty
Poverty
Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...
-ridden countryside, which suffers from an almost total lack of basic infrastructure
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
. Recurring political instability and corruption within government discourage foreign investment and delay foreign aid. On the brighter side, the government is addressing these issues with assistance from bilateral and multilateral donors.
Foreign aid
Democracy
Democracy is generally defined as a form of government in which all adult citizens have an equal say in the decisions that affect their lives. Ideally, this includes equal participation in the proposal, development and passage of legislation into law...
has received strong international support. Under the mandate carried out by the United Nations Transitional Authority in Cambodia
United Nations Transitional Authority in Cambodia
The United Nations Transitional Authority in Cambodia was a United Nations peacekeeping operation in Cambodia in 1992–93. It was also the first occasion on which the UN had taken over the administration of an independent state, organized and run an election , had its own radio station and jail,...
(UNTAC), $1.72 billion
1000000000 (number)
1,000,000,000 is the natural number following 999,999,999 and preceding 1,000,000,001.In scientific notation, it is written as 109....
(1.72 G$) was spent in an effort to bring basic security, stability and democratic rule to the country. Regarding economic assistance, official donors had pledged $880 million at the Ministerial Conference on the Rehabilitation of Cambodia (MCRRC) in Tokyo
Tokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
in June 1992, to which pledges of $119 million were added in September 1993 at the meeting of the International Committee on the Reconstruction of Cambodia (ICORC) in Paris
Paris
Paris is the capital and largest city in France, situated on the river Seine, in northern France, at the heart of the Île-de-France region...
, and $643 million at the March 1994 ICORC meeting in Tokyo. To date, therefore, the total amount pledged for Cambodia's rehabilitation is approximately 12.3 G$.
Recent developments
2007 GDP (or gross monetarised product GMP)grew an estimated 18.6%, in line with the 2000/06 average of 9.5 percent. Garment exports rose almost 8%, tourist arrivals jumped nearly 35%, and construction activity doubled. With exports decelerating somewhat,the 2007 GDP growth was driven by consumption and investment. Foreign direct investment
(FDI) inflows reached US$600 million (7 percent of GDP), slightly more than the country
received in official aid. Domestic investment, driven largely by the private sector, accounted
for 23.4 percent of GDP. Approximately 2,860 new businesses registered for operation in
2007, a 71 percent increase over 2006.
Although risks have increased, economic prospects for 2008 remain strong. The projected 7.5
percent growth rate for 2008 reflects a mix of growth in services (mainly tourism) and
construction combined with a slowdown in garment exports. Export growth, especially to the
US, began to slow in late 2007 accompanied by stiffer competition from Vietnam and
emerging risks (slowdown in the US economy and lifting of safeguards on China’s exports).
Although exports of cash crops have grown fast in recent years, developments in the garment
industry have a major impact on Cambodia’s export performance. On the other hand,
Cambodia’s exporters might benefit from the depreciation of the dollar. Another risk is
uncertainties in the construction sector.
Statistics
Investment (gross fixed): 3% of GDP (2011 est.)Household income or consumption by percentage share:
lowest 10%: 2.6%
highest 10%: 23.7% (2011)
Agriculture - products:
rice, rubber, corn, vegetables, cashews, tapioca, silk
Industries:
tourism, garments, construction, rice milling, fishing, wood and wood products, rubber, cement, gem mining, textiles
Industrial production growth rate: 5.7% (2011 est.)
Electricity:
- production: 1.273 billion kWh (2010)
- consumption: 1.272 billion kWh (2010)
- exports: 0 kWh (2010)
- imports: 274 million kWh (2010)
Exchange rates:
riels (KHR) per US dollar - 4,395.62 (2011), 4,145 (2010), 4,139.33 (2009), 4,070.94 (2008), 4,006 (2007), 4,103 (2006)
See also
- List of Cambodian companies
- Natural resources of CambodiaNatural resources of Cambodia-Metals and nipples:In general, Cambodia's mineral resources appear to be limited. In the late 1950s and throughout the 1960s, however, exploration by Chinese experts in the Christian Chun Province disclosed commercially exploitable deposits of iron ore amounting to about 5.2 million tons...
- Mineral industry in Cambodia
- Agriculture in CambodiaAgriculture in CambodiaAgriculture, accounting for 90 percent of GDP in 1985 and employing approximately 80 percent of the work force, is the traditional mainstay of the Cambodian economy. Rice, the staple food, continued to be the principal commodity in this sector...
- International Finance ComplexInternational Finance ComplexThe International Finance Complex is a 52 story complex that is in the process of being built in Phnom Penh, Cambodia near the Tonle Bassac River. The complex, which will cover an area of , will cost about $1 billion. The project will include a main office tower which is 52 storeys tall, making it...